Want to know how to be the best? Learn from the best. That’s what Lendingtree did when they looked at thousands of credit reports from people with a credit score of 801 or higher. They discovered some common financial threads among people with the best scores.
On average, credit scores can range from a low of 300 to a high of 850. According to Experian, one of the three major credit reporting agencies, average credit scores fall between 600-750. Anything 800 or above is excellent. The Lendingtree survey found the average credit score last year reached 704, which is an all-time high, is considered good.
But while credit scores are at their all-time high so is the amount of debt Americans owe. The Federal Reserve Bank of New York reports that three in ten Americans have more credit card debt than they have emergency savings—a situation not likely to improve soon. Specifically, student debt is an albatross around the necks of younger Americans which, in turn, affects their credit score.
So, what do people with exceptional credit scores have in common?
- Every person with a score of 800 or higher, in every age category, paid their bills on time. The average American has at least six late payments on their credit history.
- Those with atmospheric scores usually have long credit histories averaging 22 years. Even among millennials the average credit history is 14.5 years.
- People with elite credit scores have average mortgage debt of $126,306 and $22,000 in additional debt, such as credit cards and car loans. Average mortgage debt is highest among Generation Xers at $165,095.
- Folks with 800+ credit scores have at least $71,000 of credit available to them but their average credit balance is just $3,685. The lesson—just because you have a lot of available credit doesn’t mean you have to use it. If you use too much of your available credit the reporting agencies will lower your score.
- Those in the 800 club have a combination of different debt vehicles. They have an average of nine open accounts. And during the past two years they only had two hard credit pulls, which reduces your credit score for approximately 12 months. The hard pulls were generally when a loan was applied for or a rental application was submitted.
There is an art and discipline to managing your credit score. Watch these two videos to learn what affects you and the number of points that can be added and subtracted from your score. Knowing the system can help you achieve an elite credit score.